Monday, 24 November 2008

Popular myths about the voters and tax

There have long been strong public majorities for higher tax rates on the highest incomes. Politicians have been sceptical about this, in large part because of the folk memory of the 1992 General Election. (And we are seeing that the Conservatives now believe that a return to Majorism is a winning argument).

But let's dig a little deeper.

Mark Gill of MORI, writing in the Fabian Review back in January 2005, provided the number crunching which shows that a great deal of commentary on tax and electoral politics is based on some popular myths, showing that Labour's pledges on income tax were not nearly so central to the electoral successes of 1997 and 2001 as is so often claimed.

The notion that tax-rising parties cannot win power seems to be a hangover from the 1980s, when Conservative governments were elected on tax-cutting manifestos, and from Neil Kinnock’s defeat in the 1992 election. It draws strength from the myth that Neil Kinnock lost the 1992 election because he promised to raise taxes, and that Tony Blair won the 1997 one because he promised not to.

The flaw in this argument is that although Tony Blair pledged not to increase income tax rates in 1997, the key voters didn’t believe him anyway: in MORI’s 1997 final pre-election poll for The Times, 63 per cent said they expected that a Labour Government, if elected, would increase income tax, only 3 per cent lower than the 66 per cent who expected a Kinnock Government to do so in 1992.

This point was reinforced at the 2001 election. As early as December 1999, the public was convinced that taxes had risen under Labour: 28 per cent thought that the Government had kept taxes down since it had been elected, while 57 per cent thought it had not. By January 2001, when asked for their ‘thinking about all forms of taxes’, 48 per cent thought taxes had gone up since 1997 ‘for most people’ and 41 per cent that their own personal taxes had risen. Furthermore, few expected a re-elected Labour Government to have a better record of keeping its tax promises: at the end of May, 74 per cent thought that Labour would increase taxes if re-elected, and only 16 per cent thought it would not.

All told, the voters elected Tony Blair with a landslide in 1997, expecting him to increase taxes, and re-elected him in 2001 believing that his Government had done so, and would do so again.